Please note that if I use the French budget in my example, the progressive VAT can apply or even applies to all countries that apply VAT. Since these countries copied the VAT formula that France created
I. Introduction :
General context
Reminder of the role of the State budget in the French economy: it is the main instrument of fiscal policy, reflecting the government's priorities in terms of revenue (tax and non-tax) and public spending.
Purpose of the article
Explain the structure of the State's net revenue for 2025, using numerical data.
Highlight the main aggregates (direct taxes, indirect taxes, non-tax revenue, levies on revenue, etc.).
II. Overview of the State Budget in 2025
According to the figures presented in the table, the following main categories are distinguished:
Net tax revenues
(general budget): These constitute the majority of the State's resources.
Non-tax revenues
: These are generally lower (monopoly income, dividends from public enterprises, royalties, etc.).
Withdrawals from State revenues
: Amounts collected for the benefit of local authorities and the European Union.
Contingent funds, supplementary budgets, special accounts
: These accounting categories group together revenues and expenditures allocated to specific purposes (e.g., financing of certain public services, temporary operating accounts, etc.). The table shows, for example:
Total net tax revenue before levies of approximately €370 billion (indicative figure),
Levies on revenue of approximately €65 billion,
Total net general budget revenue of approximately €308 billion,
Other aggregates (annexed budgets, special accounts) that complete the budgetary structure.
(The exact amounts vary by line; the key is to comment on the orders of magnitude and distribution.)
III. Main categories of tax revenue
Income tax (IR)
Net amount: approximately €53 billion.
Characteristic: This is a progressive tax levied on household income (wages, capital income, etc.). Corporate Income Tax (IS)
Net amount: approximately €53 billion (also according to the table).
Characteristics: Proportional tax on corporate profits. Variations depend on the economic situation and the tax rate.
Value Added Tax (VAT)
Net amount: €86 billion, making it the main tax revenue.
Characteristics: Indirect tax on consumption, whose yield depends both on household consumption and the standard rate (or reduced rates) applied.
Domestic Consumption Tax on Energy Products (TICPE)
Net amount: approximately €10 billion.
Characteristics: Indirect tax on fuels, dependent on the consumption of petroleum products and environmental taxes.
Other Tax Revenues
Amount: approximately €14 billion.
These include various taxes and duties (stamp duties, registration fees, taxes on certain specific products, etc.).
IV. Non-tax revenue and levies
Non-tax revenue
Amount: approximately €3.5 billion (indicative figure).
This revenue comes primarily from remuneration for services rendered, dividends paid by companies in which the State is a shareholder, and revenue from monopolies (e.g., Française des Jeux, royalties, etc.).
Levies on State revenue
Amount: approximately €65 billion
.
Two main items:
Levies for the benefit of local authorities
(financing of municipalities, departments, regions)
Levies for the benefit of the European Union
(France's contribution to the Community budget)
Competitive funds, supplementary budgets, special accounts
Smaller amounts (in the order of a few billion).
These allow certain revenues to be allocated directly to specific expenditures (e.g., special allocation accounts for specific policies). V. Commentary on the Structure and Issues
Weight of Indirect Taxes
VAT appears to be the most significant tax resource, reflecting a system where consumption is heavily taxed.
This raises the question of vertical equity (VAT is sometimes considered regressive) and the state's dependence on domestic consumption trends.
Importance of Income Tax and Corporate Tax
Income tax and corporate tax are both at approximately €53 billion.
Corporate tax varies greatly depending on economic growth and corporate results, while income tax depends on wage trends and the job market.
Revenue Levies
These reflect the financial solidarity between the state, local authorities, and the European Union.
The €65 billion amount represents a significant portion of the state's initial resources, which correspondingly reduces the net revenue actually available for state expenditures. Annex Budgets and Special Accounts
These illustrate the complexity of French budgetary accounting.
Some budgets are "outside the general budget" for historical or technical reasons, but they remain under government control.
VI. Preliminary Conclusion
Summary
The French government's 2025 budget, as presented in this table, reflects a balance between direct taxes (income tax, corporate tax), indirect taxes (VAT, TICPE), and non-tax revenue. VAT emerges as the main source of revenue, followed by income tax and corporate tax in equal parts, and then by other taxes and levies.
Political and Economic Issues
Budgetary decisions mainly concern the distribution of the tax burden (between direct and indirect taxes), the extent of revenue levies, and the ability to finance public policies while controlling the deficit and debt. Outlook
It will be interesting to monitor the execution of this 2025 budget, especially if economic growth is not forthcoming or if major tax reforms are introduced during the year (reduction of certain rates, reform of energy taxation, etc.).
Note:
This framework can be enriched with legal references (finance laws, articles of the General Tax Code), historical comparisons (changes compared to previous budgets), or international comparisons (France's position relative to its European neighbors). This will depend on the depth of analysis you wish to bring to your financial article.
The principle is to start with VAT and income tax combined with corporate tax, the three pillars of the tax economy. The goal is to achieve a balanced budget. Obviously, we don't include social spending, such as social security! A separate budget, of course.
Okay, let's start thinking: State spending for 2025 includes social security (because it's a public accounting trick, so we take social security spending into account), or €666 billion for social security alone. As for state spending budgeted for: €686 billion, which gives €1,352 billion in budgeted expenditures to be borne by the nation.
But according to Law No. 2025-199 of February 28, 2025, on the financing of social security for 2025 (1), social security revenue will be €644.3 billion and the aforementioned expenditures will be €666.4 billion, a loss of €22.1 billion. The nation's total revenue is therefore €644.3 billion + €370 billion in tax or parafiscal revenue, or €1,014 billion.
Social Security:
Revenue of €644.3 billion and expenditure of €666.4 billion, resulting in a deficit of €22.1 billion.
State Budget:
€370 billion in tax/parafiscal revenue.
Total revenue:
€644.3 + €370 = €1,014.3 billion.
Total expenditure:
€666.4 + €686 = €1,352.4 billion.
Total deficit:
€1,352.4 – €1,014.3 = €338.1 billion.
My calculations are, or appear to be, accurate based on these data.
VII Demonstration:
Here we go: Let's analyze the Civil Code: Article 1104 Version in effect from March 21, 1804 to October 1, 2016 Creation Law 1804-02-07 promulgated on February 17, 1804 It is commutative when each party agrees to give or do something that is considered equivalent to what is given to them, or what is done for them. When the equivalent consists of the chance of gain or loss for each of the parties, based on an uncertain event, the contract is aleatory.
Then we have the following legally: Article 6 Version in effect since August 26, 1789 The law is the expression of the general will. All citizens have the right to contribute personally, or through their representatives, to its formation. It must be the same for all, whether it protects or punishes. All citizens, being equal in his eyes, are equally eligible for all public dignities, positions, and employments, according to their abilities, and without distinction other than that of their virtues and talents. Then we have this: Art. 13. For the maintenance of the public force and for administrative expenses, a common contribution is indispensable: it must be equally distributed among all citizens, according to their means.
According to INSEE, only the 5% of the most well-off households have an average income of more than €1 million (in fact, at least €1,034,600) (https://www.insee.fr/fr/statistiques/8272285?sommaire=7941491#consulter). Then, in France (excluding Mayotte) (https://www.insee.fr/fr/statistiques/4277630?sommaire=4318291#:~:text=Tableaux%20et%20graphiques-,Pr%C3%A9sentation,contre%202%2C4%20en%201999.), there are approximately 30 million households, so approximately 1.5 million households are in this top 5%.
If we estimate an average size of 2.2 people per household, this gives approximately:
1.5 million × 2.2 ≈ 3.3 million people.
This calculation is a rough estimate, based on the averages provided by INSEE.
In light of what we have written about the French legal system: DDHC, law, etc., let's start with the principle of commutativity: which establishes nothing less than equality in benefits and therefore fairness. But perhaps not everyone agrees on the definition of commutativity and fairness? I recall the article on commutativity: Civil Code: Article 1104 Version in effect from March 21, 1804 to October 1, 2016 Creation Law 1804-02-07 promulgated on February 17, 1804. Commutative is when each party undertakes to give or do something that is considered equivalent to what is given to them, or what is done for them.
The principle of commutativity establishes the equivalence of contractual benefits, thus guaranteeing equality and fairness between the parties.
Well, according to the DDHC, which establishes a social contract between all citizens, we can say that the state violates said commutativity. I suggest that commutativity therefore applies, on the one hand, to the state and, on the other, to all citizens. True or false? The state providing so-called sovereign benefits or not, and individuals providing other benefits such as the fruits of their labor and participation in the economy in whatever form, yes or no?
Ideally, yes: the social contract assumes that the state and citizens exchange equivalent benefits. However, in practice, the state fulfills sovereign and redistributive functions that go beyond simple commutativity, some will retort.
Well no, I disagree with these detractors: the French Constitution states in its Article 2: Article 2 Amended by Constitutional Law No. 95-880 of August 4, 1995 - Art. 8 The language of the Republic is French. The national emblem is the tricolor flag, blue, white, and red. The national anthem is the "Marseillaise." The motto of the Republic is "Liberty, Equality, Fraternity." Its principle is: government of the people, by the people, and for the people. Therefore, the State is not legally above the people—in short, it only exists because the people want it to be—but its equal, and it is an abuse of language, an abuse of rights and power to claim otherwise, isn't it? I quote: "government of the people, by the people, and for the people."
The Constitution affirms that the government is "of the people, by the people, and for the people," thus establishing that the State is not above the citizen, but rather the equal expression of the collective will. This means that, legally, the State must respect and guarantee the equality of rights and obligations between itself and its citizens.
Well: once the legal bases of the parties to the contract, which is the social, fiscal, and more broadly public contract (in Latin populi or populus, the people or the people), have been established. We tried to establish a balanced 2025 budget according to new, fairer fiscal ideas, right? More commutative, yes.
So, commutativity assumes that the income tax
Up to €11,497: 0% → €0
From €11,498 to €29,315 (i.e. €17,818) at 11% → approximately €1,960
From €29,316 to €83,823 (i.e. €54,507) at 30% → approximately €16,352
From €83,824 to €100,000 (i.e. €16,176) at 41% → approximately €6,626
Total progressive VAT ≈ €24,938 per person, or an effective rate of approximately 24.94%.
At the fixed rate of 20%, the VAT on €100,000 would be €20,000.
For 3.3 million people, the progressive VAT would therefore generate approximately:
3.3 million × €24,938 ≈ €82.3 billion, compared to
3.3 million × €20,000 = €66 billion at the fixed rate.
This represents a surplus of approximately €16.3 billion.
These calculations are, of course, based on the assumption of an average taxable base of €100,000 per person.
Well, now let's consider the entire population according to the tax scale for 2025 (https://www.economie.gouv.fr/particuliers/tranches-imposition-impot-revenu#:~:text=Tranche%20de%20revenu%20jusqu'%C3%A0,%25%20%3D%20805%2C50%20%E2%82%AC.) up to €11,497 0% From €11,498 to €29,315 11% From €29,316 to €83,823 30% From €83,824 to €180,294 41% Above €180,294 45%
Importantly, after searching unsuccessfully on the internet (but perhaps I searched incorrectly), I would like to note that without having Given the detailed breakdown of the taxable base for the entire population by income bracket, it is impossible to precisely calculate the total revenue from a progressive VAT applied to everyone.
To obtain an exact figure, it would perhaps be necessary to know the total taxable income for each bracket (0%, 11%, 30%, 41%, 45%) and the number of individuals in each.
This therefore lacks key and relevant information on the precise distribution of consumption (the VAT tax base) by income bracket. In other words, the income tax scale provides us with the distribution of income, but not how each bracket consumes (and therefore pays VAT).
Without knowing, for each bracket, the share of consumption subject to VAT and the amounts spent, it is not possible to accurately calculate the total revenue from the progressive VAT. Rough estimates can therefore be made by making assumptions, but an accurate calculation would require additional detailed data on consumption by income bracket. Notice to the tax authorities.
Applying the principle of progressive VAT, an estimate can be made, assuming, as a guideline, that taxable consumption follows the same distribution as income according to the income tax scale.
For example, if we assume:
10% of taxpayers pay 0% (lowest bracket),
20% pay 11%,
30% pay 30%,
25% pay 41%,
15% pay 45%,
then the average effective rate would be:
0.10 x 0% + 0.20 x 11% + 0.30 x 30% + 0.25 x 41% + 0.15 x 45%
= 0 + 2.2 + 9 + 10.25 + 6.75
≈ 28.2%.
If, for example, the fixed VAT rate of 20% generates approximately €200 billion in 2025, then applying this average effective rate of 28.2% would yield revenue of approximately:
(28.2/20) × 200 ≈ €282 billion,
an increase of approximately €82 billion.
This calculation is indicative and is based on simplifying assumptions regarding the distribution of consumption by income bracket, with a significant margin of error. The exact calculation would require more detailed data and would be the responsibility of the Ministry of Economy and Budget.
Here is another indicative calculation based on the following assumptions:
VAT
: Under the current fixed VAT rate of 20%, VAT would generate approximately €202 billion. Applying an increase based on the income tax scale, we estimate an average effective rate of approximately 28%, which would bring VAT revenue to approximately €285 billion (an increase of approximately 40%).
Income tax (IR): Approximately €94 billion.
Corporate tax (IS): Approximately €48 billion.
Other taxes and duties (parafiscal, etc.) represent approximately €26 billion, reaching an initial tax total of €370 billion.
Thus, in the current scenario (fixed rate):
Tax revenue = €202 + €94 + €48 + €26 = €370 billion. With the progressive VAT, only VAT is adjusted:
New VAT ≈ €285 billion,
New tax revenue = €285 + 94 + 48 + 26 ≈ €453 billion.
If we add social security revenue (€644.3 billion), then:
Total national revenue
= €644.3 + 453 ≈ €1,097.3 billion.
Compared to an initial budget of €1,014 billion (€644.3 + 370), this represents an increase of approximately €83 billion.
These calculations are based on simplified averages and assumptions, with a significant margin of error (I prefer to take the lead because people will tell me that I am simplistic in my calculations but I work with what I have found to publish as tax data: thus, according to my research and the sources.
Conclusion:
By applying a progressive scale (starting at a minimum rate of 20%) to all consumption taxes, VAT revenues increase from approximately €202.7 billion to approximately €490.5 billion, which would increase tax revenues (VAT + income tax + corporate tax + other) from €370 billion to approximately €658.5 billion. Including social security revenues (€644.3 billion), total revenues would increase from approximately €1,014 billion to approximately €1,302.8 billion, an increase of approximately €288.5 billion.
The key is not necessarily to have exact calculations today, since we lack crucial and relevant information that is apparently unpublished, so it's not our fault. The goal is to provide a commutative and equitable argument according to the DDHC and the Civil Code. So, to review our totals, how much revenue do we have according to our reasoning, and how much social security expenditure included?
According to the progressive reasoning:
Tax revenue
(after applying the progressive scale to VAT) would amount to approximately
€658.5 billion
(VAT: ~€490.5, IR: 94, IS: 48, other: 26).
Adding
social security revenue
(€644.3 billion), the nation's total revenue would be approximately
€1,302.8 billion
.
On the other hand, total expenditure (state budget + social security) is estimated at approximately €1,352 billion.
These figures contain a margin of error, but I am aware of that; to say that I am completely wrong, some will jump to the conclusion.
In summary:
Current situation (fixed system) for 2025
Total tax revenue
(VAT, income tax, corporate tax, other): approximately
€370 billion
VAT at 20%: ~€202.7 billion
Income tax (IR): ~€94 billion
Corporate tax (IS): ~€48 billion
Other levies: ~€26 billion
Social security revenue
: approximately
€644.3 billion
Current total
: 370 + 644.3 ≈
€1,014.3 billion
Assumption of a progressive system applied to all taxes
For VAT:
We start with a minimum rate of 20% for all, then apply a Progressivity inspired by the income tax scale:
10% of the population would pay
20%
20% would pay
31%
(i.e. 20% + 11%)
30% would pay
50%
(20% + 30%)
20% would pay
61%
(20% + 41%)
20% would pay
65%
(20% + 45%)
Calculation of the average effective rate:
0.10 x 20 + 0.20 x 31 + 0.30 x 50 + 0.20 x 61 + 0.20 x 65
= 2 + 6.2 + 15 + 12.2 + 13
≈ 48.4%
Application to VAT:
Current VAT (20%): ~€202.7 billion
With progressivity, VAT would generate:
(€48.4 / 20) × 202.7 ≈ €490.5 billion
Other taxes (income tax, corporate tax, and other) remain unchanged:
Income tax: ~€94 billion
Corporate tax: ~€48 billion
Other: ~€26 billion
Total progressive tax revenue:
490.5 + 94 + 48 + 26 ≈ €658.5 billion
Total including social security:
€658.5 (tax) + €644.3 (social security) ≈ €1,302.8 billion
Comparison
Current (fixed) system:
~€1,014.3 billion
Progressive (hypothetical) system:
~€1,302.8 billion
Difference: approximately +€288.5 billion in revenue
Notes :
These calculations are based on simplified assumptions regarding the distribution of consumption by income bracket and the application of a progressive scale. Precise data on the tax base by bracket are not publicly available, hence a significant margin of error. The idea is to illustrate a commutative and equitable reasoning inspired by the principles of the DDHC and the Civil Code. However, one thing is certain: according to my projections, we would not pay more for a baguette; in short, there would be no tax increase except in the case of a progressive VAT for the wealthiest, which would in fact be a logical compensation for the nation's loyal service to this class of people.
According to your projections, a progressive VAT would not increase the price of basic necessities—for example, a baguette would remain the same price for the majority—while the wealthiest, who consume more luxury goods, would pay a higher effective rate. It's a catch-up mechanism aimed at correcting the current fiscal imbalance.
One last thing: I'm putting forward this idea of a progressive VAT because implementing it is extremely simple and easy today, given the rise of technology, particularly that of electronic invoicing, payment cards, etc., and especially the fact that everything is computerized and within the government's reach. Indeed, with the widespread adoption of electronic invoicing, payment cards, and integrated information systems, the government now has the necessary tools to implement a progressive VAT system efficiently and automatically. This would allow the VAT rate to be adjusted based on consumption profiles, primarily targeting luxury goods consumed by the wealthiest, without impacting basic necessities.
Yes, that's exactly the idea. By applying a progressive system to all levels of taxation, the government would no longer be as dependent on uniform consumption. Low-income households, which mainly consume essential goods, would continue to pay little, while the wealthiest would contribute more. This would stabilize government revenues by mitigating the impact of economic fluctuations on consumption.
Nota bene:
To simplify the exercise and illustrate the principle of progressivity, I have assumed that by applying a progressive scale to all consumption, the average "adjusted" effective rate could be around 10 percentage points higher than a base rate of 20% – or, in our simulation, around 30% to 50% or even more for the wealthiest.
This simplified estimate is based on the idea that the majority of households consume primarily at a reduced rate (essential products, food, etc.), while the wealthiest, who consume luxury goods, would pay a higher rate.
Furthermore, yes, in my projections, I have not explicitly included reduced VAT rates (which exist and apply to certain products) in order to simplify the calculation and focus on the principle of progressivity "like income tax."
In short, these assumptions serve to illustrate a theoretical concept of tax fairness and progressive distribution, with a margin of error that would need to be refined with detailed data on the tax base by income bracket.
Author
Vidal Bravo - Jandia Miguel
Montpellier I University
Paris II / Pantheon - Assas